O-LevelAccountingAccounting procedures7707/21 · May/June 2013 · Q414 Marks
On 1 April 2011 Lynne purchased two motor vehicles for business use on credit from Villa Motors Limited. The vehicles cost $12000 each. Depreciation is charged on the motor vehicles at 20% per annum by the diminishing (reducing) balance method. A full year's depreciation is charged in the year of purchase but no depreciation is charged in the year of sale. On 23 January 2013 one of the motor vehicles was sold for $6500. REQUIRED
- (a)Show the journal entry to record the purchase of the motor vehicles on 1 April 2011. Dates and narratives are not required. Journal Debit $ Credit $[2]
- (b)Prepare the provision for depreciation account for the years ended on 31 March 2012 and 2013. Provision for Depreciation account[5]
- (c)Prepare the disposal account. Disposal account[5]
- (d)State two other methods of depreciation.[2]
Mark scheme
Marking points from the official mark scheme (May/June 2013). The mark or mark type is shown in brackets.
- [1] (a) Dr Motor vehicles $24 000
- [1] (a) Cr Villa Motors Limited $24 000
- [1] (b) 2012 Mar 31 Income statement $4800
- [1] (b) 2013 Jan 23 Disposal account $2400
- [1] (b) 2013 Mar 31 Income statement $1920
- [1] (b) 2013 Mar 31 Balance c/d $4320
- [2] (b) 2013 Apr 1 Balance b/d $4320
- [1] (c) 2013 Jan 23 Motor vehicle $12000
- [1] (c) 2013 Jan 23 Bank $6500
- [1] (c) 2013 Jan 23 Provision for Depreciation $2400
- [2] (c) 2013 Mar 31 Income statement (Loss) $3100
- [1] (d) Straight-line method of depreciation
- [1] (d) Revaluation method of depreciation
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